The Members of
LKP Finance Limited
Report on the Audit of the Standalone Ind AS Financial
1. Qualified Opinion
We have audited the accompanying standalone Ind AS financial statementsof LKP Finance Limited ("the Company") which comprise the Balance Sheet as at31 March 2022 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of changes in equity and the Statement of Cash Flows for the year then endedon that date and a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us except for the possible effects of matters described in theBasis for Qualified opinion of our report the aforesaid standalone financial statementsgive the information required by the Companies Act 2013 ("the Act") in themanner so required and give a true and fair view in conformity with the Indian AccountingStandards prescribed under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended ("Ind AS") and other accountingprinciples generally accepted in India of the state of affairs of the Company as at 31March 2022 profit and total comprehensive income changes in equity and its cash flowsfor the year ended on that date.
2. Basis for Qualified Opinion
(a) The Company has investment in unquoted equity shares with acarrying value of Rs.5444.92 lakhs. The Company has not obtained fair valuation of theseinvestments as at 31 March 2022 as required by Ind AS 109 "FinancialInstrument". In the absence of fair valuation report we are unable to comment on thecarrying value of these investment amounting to Rs 5444.92 lakhs and the consequentimpact thereof on Other Comprehensive Income.
(b) The Company did not obtain/ receive balance confirmation/ termsheet from two lenders amounting to Rs 3596.65 lakhs. Hence we could not obtain externalconfirmations as required in SA-505 Standards on Auditing and are unable to comment onadjustments or disclosures if any that may arise
We conducted our audit of the standalone Ind AS Financial Statements inaccordance with the Standards on Auditing (SAs) specified under section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the standalone financial statementssection of our report. We are independent of the Company in accordance with the Code of
Ethics issued by the Institute of Chartered Accountants of India (ICAI)together with the ethical requirements that are relevant to our audit of the standalonefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our qualified audit opinion on thestandalone Ind AS financial statements.
3. Emphasis of Matter
As described in Note 28(b) to the Standalone Ind AS financialstatements State Bank of India obtained an order from Debt Recovery Tribunal (DRT)Bangalore against Kingfisher Airlines United Breweries (Holdings) Ltd and Others forrecovery of dues from them. The Company received a garnishee order from the RecoveryOfficer DRT Bangalore for an amount of Rs 2500 lakhs (plus interest) as the financialstatements of Kingfisher Finvest Limited showed an amount of Rs 2500 Lakhs due from theCompany. The Company has contested the same. The Company has deposited an amount of Rs1126.22 Lakhs with the DRT which is on account of deposit for preferring the Appealbefore DRAT Chennai. The matter is presently pending before the Debt Recovery AppellateTribunal Chennai for hearing.
Our opinion is not modified in respect of this matter.
4. Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe year ended 31 March 2022. These matters were addressed in the context of our audit ofthe Ind AS financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters.
|Sr. No Key Audit Matter ||How our audit addressed the key audit matter |
|1. Non recognition of Deferred tax assets on carried forward tax losses || |
|The Company's ability to recover deferred tax assets are assessed by management at the close of each financial year taking into account availability of sufficient future taxable income. ||We have considered the recoverability of such deferred tax assets on tax losses carried forward as a key audit matters due to the importance of management's estimation and judgment and the materiality of amounts at stake. |
| ||We reviewed the evaluation process of deferred tax assets on tax losses carried forward implemented by the Management. |
| ||We assessed the permanence of methods used the relevance and consistency of underlying assumptions (like earnings growth and applicable tax rates) and tested the arithmetic accuracy. |
| ||We assessed the probability that the company may not use in the future its deferred tax assets particularly with regard to the ability of the Company to generate sufficient future taxable profits in a foreseeable future allowing the use of existing tax losses carried forward. |
5. Other information
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the DirectorsReport along with annexures but does not include the Ind AS financial statements and ourauditor's report thereon.
Our opinion on the Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the Ind AS financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.
6. Management responsibility for the standalone Ind AS financialstatements.
The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these Ind ASfinancial statements that give a true and fair view of the financial position financialperformance total comprehensive income changes in equity and cash flows of the Companyin accordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended.
This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act
for safeguarding the assets of the Company and for preventing anddetecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone Ind AS financial statements the Board ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless management either intends to liquidate the Company orto cease operations or has no realistic alternative but to do so. The Board of Directorsare responsible for overseeing the Company's financial reporting process.
7. Auditor's Responsibilities for the Audit of the Standalone IndAS Financial Statements
Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due to fraud or error and to issue an auditor's report that includes ouropinion. Reasonable assurance is a high level of assurance but is not a guarantee that anaudit conducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone Ind AS financialstatements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal financial controls relevantto the audit in order to design audit procedures that are appropriate in thecircumstances. Under section 143(3)(i) of the Act we are also responsible for expressingour opinion on whether the Company has adequate internal financial controls system inplace and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone Ind AS financial statements or ifsuch disclosures are inadequate to modify our opinion. Our conclusions are based on theaudit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalone IndAS financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.
8. Report on Other Legal and Regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2020("the Order") issued by the Central Government in terms of Section 143(11) ofthe Act we give in the "Annexure A" a statement on the matters specified in theparagraph 3 and 4 of the Order.
2. As required by Section 143 (3) of the Act we report that:
a) We have sought except for the matter described in the "Basisfor Qualified Opinion" paragraph above and obtained all the information andexplanations which to the best of our knowledge and belief were necessary for the purposesof our audit.
b) Except for the effects/possible effects of the matter described inthe "Basis for Qualified Opinion" paragraph above in our opinion proper booksof account as required by law have been kept by the Company so far as it appears from ourexamination of those books.
c) The Balance Sheet the Statement of Profit and Loss including OtherComprehensive Income the Statement of Changes in Equity and the Statement of Cash Flowdealt with by this Report are in agreement with the books of account.
d) Except for the effects/possible effects of the matter described inthe "Basis for Qualified Opinion" paragraph above in our opinion the aforesaidstandalone Ind AS financial statements comply with the Indian Accounting Standardsspecified under Section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended.
e) On the basis of the written representations received from thedirectors as on 31 March 2022 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2022 from being appointed as a director in termsof Section 164 (2) of the Act.
f) The matters described in the Basis for Qualified Opinion paragraphabove in our opinion may have an adverse effect on the functioning of the Company
g) With respect to the adequacy of the internal financial controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".
h) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the actas amended;
In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid/payable by the Company to its directorsduring the year is in accordance with the provisions of Section 197 of the Act.
i) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements. (Refer note 28 of thefinancial statements)
ii. The Company has made provision as required under the applicable lawor accounting standards for material foreseeable losses if any in respect of long termcontracts including derivative contracts; and
\iii. There are no amounts required to be transferred to the InvestorEducation and Protection Fund by the Company during the year.
iv. (a) The management has represented that to the best of itsknowledge and belief other than as disclosed in notes to the accounts no funds have beenadvanced or loaned or invested (either from borrowed funds or share premium or any othersources or kind of funds) by the Company to or in any other persons or entities includingforeign entities ("Intermediaries") with the understanding whether recorded inwriting or otherwise that the Intermediary shall whether directly or indirectly lend orinvest in other persons or entities identified in any manner whatsoever by or on behalf ofthe Company ("Ultimate Beneficiaries") or provide any guarantee security or thelike on behalf of the Ultimate Beneficiaries
(b) The management has represented that to the best of its knowledgeand belief other than as disclosed in the notes to the accounts no funds have beenreceived by the Company from any persons or entities including foreign entities("Funding Parties") with the understanding whether recorded in writing orotherwise that the Company shall whether directly or indirectly lend or invest inother persons or entities identified in any manner whatsoever by or on behalf of theFunding Party ("Ultimate Beneficiaries") or provide any guarantee security orthe like on behalf of the Ultimate Beneficiaries; and
(c) Based on the information and details provided and other auditprocedures followed nothing has come to our notice that has caused us to believe that therepresentations under subclause iv(a) and (b) contain any material misstatement.
v. As stated in Note 40 to the standalone financial statements
(a) The final dividend proposed in the previous year declared and paidby the Company during the year is in accordance with Section 123 of the Act.
(b) The Board of Directors of the Company have proposed final dividendfor the year which is subject to approval of the members at the ensuing Annual GeneralMeeting. The amount of dividend proposed is in accordance with Section 123 of the Act
For MGB & Co LLP
Chartered Accountants Firm
Registration Number 101169W/W-100035
Sanjay Kothari Partner Membership Number 048215
Mumbai 05 May 2022
Annexure - A to the Independent Auditor's Report
Annexure referred to in paragraph 8 (1) under "Report on OtherLegal and Regulatory Requirements" of our report of even date to the Members of theLKP Finance Limited on the standalone Ind AS financial statements for the year ended 31March 2022.
i. (a) The Company has maintained proper records showing full
particulars including quantitative details and situation of PropertyPlant and Equipment. The Company does not have any intangible assets and right of useassets.
(b) As explained to us all the property plant and equipment have beenphysically verified by the management during the year which in our opinion is reasonablehaving regard to the size of the Company and nature of its assets. As informed to us nodiscrepancies were noticed on such verification.
(c) According to the information and explanations given to us and onthe basis of examination of records the title deeds of immovable property are held in thename of the Company.
(d) The Company has not revalued its Property Plant and Equipment(including Right to Use assets) and intangible assets during the year and hence clause3(i)(d) of the Order is not applicable.
(e) There are no proceedings initiated or pending against the Companyfor holding any benami property under the Benami Transactions (Prohibition) Act 1988 (45of 1988) and rules made thereunder and hence clause 3(i) (e) of the Order is notapplicable.
ii. (a) The Company's business does not involve inventories andaccordingly the requirements under clause 3(ii)(a) of the Order is not applicable to theCompany
(b) The Company has been sanctioned working capital limits in excess offive crore rupees in aggregate from banks and financial institutions on the basis ofpledge of security of investments in mutual fund equity shares and bonds. The quarterlyreturns or statements are not required to be filed by the Company and hence clause3(ii)(b) of the Order is not applicable.
iii. (a) As the Company is a Non- Banking Finance Company
(NBFC) holding Certificate of Registration from Reserve Bank of Indiaand having its principal business to give loans and make investments hence clause iii (a)of the Order is not applicable to the Company.
(b) In our opinion the Company has made investments and given loansduring the year. The investments made interest and other terms and conditions on whichthe loan given to related parties and other parties were prima facie not prejudicial tothe interest of the Company. The Company has not provided guarantees or securities duringthe year.
(c) In respect of loans granted by the Company the repayments ofprincipal amounts and interest are generally regular considering the stipulation torepayment except as detailed below
|Name of the entity ||Amount Rs./Lakh ||Due Date ||Extent of delays (Days) ||Nature of transaction ||Remarks |
|Aurangabad Auto Engineering Private Limited ||8.79 ||31 March 2021 ||131 ||Interest || |
|Pahari Projects Private Limited ||5.85 ||31 March 2021 ||126 ||Interest || |
|Mayuben Ventures Private Limited ||9.09 ||23 December 2021 ||96 ||Interest || |
|LKP Securities Limited ||0.55 ||14 March 2022 ||17 ||Interest || |
|Khamabalya Sanat ||0.39 ||04 March 2022 ||27 ||Interest || |
|ICED Deserts & Food Parlours India Private Limited ||400.00 ||28 March 2020 ||733 ||Principal || |
Treated as Non-Performing Assets (NPA) and interest not provided as per NBFC guidelines
|100.00 ||28 March 2020 ||481 ||Principal |
|Aureilla Estate and Investments Priavte Limited ||900.00 ||28 March 2020 ||733 ||Principal ||NPA Loan has been written off as not recoverable as at 31 March 2022 |
|SSK Scripts Private Limited ||200.00 ||01 December 2021 ||120 ||Principal ||Treated as NPA and interest not provided as per NBFC guidelines |
|Bhamasa Exports Private Limited ||250.00 ||28 March 2020 ||537 ||Principal ||Interest waived off |
|Mulraj Mody ||12.00 ||20 January 2021 ||357 ||Interest || |
|4.04 ||23 September 2021 ||189 ||Interest || |
|4.78 ||20 January 2022 ||70 ||Interest || |
(d) There is no overdue amount in respect of interest receivable andloans granted for more than 90 days except as stated below
The Company has taken reasonable steps for recovery of principal andinterest
|No of cases ||Principal overdue (Rs. Lakhs) ||Interest overdue (Rs. Lakhs) ||Total Overdue (Rs. Lakhs) ||Remarks |
|2 ||600.00 || ||600.00 ||Treated as NPA and interest not provided as per NBFC guidelines. |
(e) As the Company is a Non- Banking Finance Company holdingCertificate of Registration from Reserve Bank of India and having its principal businessto give loans and make investments hence clause iii (e) of the Order is not applicable tothe Company
(f) The loans granted is repayable on demand. The aggregate amountpercentage thereof to the total loans granted aggregate amount of loans granted toPromoters related parties as defined in clause (76) of section 2 of the Companies Act2013 is as under
(Rs. In lakhs)
|Name of the Party ||All Parties ||Promoters ||Related Parties |
|Aggregate of Loans/ advances in the nature of loans - Repayable on demand* ||10326.00 ||- ||460.00 |
|Percentage of loans/ advances in the nature of loans to total loans ||78.20% || ||3.48% |
* where the terms of the agreement is mentioned with a rider of
repayable on demand has been considered in the above table.
iv. According to the information and explanations given to us and therecords of the Company examined by us the Company has complied with the provisions ofSection 185 and Section 186 of the Act in respect of loans granted and investments madewherever applicable. The Company has not given guarantees and provided security for whichprovisions of Section 185 and Section 186 of the Act are not applicable.
v. The Company has not accepted any deposits or amounts which aredeemed to be deposits from the public within the directives issued by Reserve Bank ofIndia and within the meaning of Sections 73 to 76 of the Act and the rules framedthereunder.
vi. According to information and explanation given to us the CentralGovernment of India has not prescribed the maintenance of cost records under Section148(1) of the Act for any of the activities carried on by of the Company
vii. According to the records of the Company examined by us andinformation and explanations given to us:
a) Undisputed statutory dues including provident fund employees'state insurance income tax sales tax service tax goods and services tax duty ofcustoms duty of excise value added tax cess and others as applicable have generallybeen regularly deposited with the appropriate authorities except delays in few cases.There are no undisputed amounts payable in respect of aforesaid dues outstanding as at 31March 2022 for a period of more than six months from the date they became payable.
b) There are no amounts of any statutory dues which are yet to bedeposited on account of any dispute.
viii. There are no such transactions relating to previously unrecordedincome that have been surrendered or disclosed as income during the year in the taxassessments under the Income Tax Act 1961 (43 of 1961).
ix. (a) According to the records of the Company examined by
us and the information and explanations given to us the Company hasnot defaulted in repayment of loans or borrowings to banks and financial institution.However in case of inter corporate deposits from other parties there are no stipulationsfor repayment (Refer Note 13). The Company has not taken any loan from Government orissued debentures during the year.
|Nature of borrowing including debt securities ||Name of lender* ||Amount not paid on due date ||Whether principal or interest ||No. of days delay or unpaid ||Remarks if any |
|Inter corporate Deposits ||Other companies ||3596.65 ||Principal || ||No stipulations for repayment in absence of term sheet |
(b) According to the records of the Company examined by us andinformation and explanations given to us the Company is not declared wilful defaulter byany bank or financial institution or any other lender.
(c) According to the records of the Company examined by us andinformation and explanations given to us the Company has not taken any term loan duringthe year and there are no outstanding term loans at the beginning of the year and hencereporting under clause 3(ix)(c) of the Order is not applicable.
(d) According to the records of the Company examined by us andinformation and explanations given to us funds raised on short term basis have not beenutilized for long term purposes.
(e) According to the records of the Company examined by us andinformation and explanations given to us the Company has not taken any funds from anyentities to meet obligations of its subsidiaries and there are no joint venture andassociate.
(f) According to the records of the Company examined by us andinformation and explanations given to us the Company has not raised any loans during theyear on the pledge of securities held in its subsidiaries and there are no joint ventureand associate.
x. (a) In our opinion and according to the information and explanationsgiven to us the Company has not raised any money by way of initial public offer orfurther public offer (including debt instruments) and hence reporting on clause 3(ix)(f)of the Order is not applicable.
(b) According to the records of the Company examined by us andinformation and explanations given to us the Company has not made any preferentialallotment or private placement of shares or fully or partly or optionally convertibledebentures and hence clause 3(x)(b) of the Order is not applicable.
xi. (a) During the course of our examination of the books andrecords ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of fraud by the Company or on the Company noticed or reported duringthe year nor have been informed of any such case by the Management.
(b) No report under sub-section (12) of section 143 of the Act has beenfiled in Form ADT-4 as prescribed under rule 13 of Companies (Audit and Auditors) Rules2014 with the Central Government during the year and upto the date of this report.
(c) According to the records of the Company examined by us andinformation and explanations given to us there are no whistle blower complaints receivedduring the year.
xii. In our opinion and according to the information and explanationsgiven to us the Company is not a Nidhi company and the Nidhi Rules 2014 are notapplicable to it. Hence clause (xii) (a) (b) and (c) of the Order are not applicable.
xiii. According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with Sections 177 and 188 of the Act and details of suchtransactions have been disclosed in the standalone Ind AS financial statements as requiredby the applicable Accounting
xiv. (a) During the year Internal audit has been carried out by theIndependent firm of Chartered accountants. In our opinion and according to the informationand explanations given to us the scope and coverage is commensurate with the size of theCompany and the nature of its business.
(b) We have considered the internal audit reports for the year underaudit issued by Company during the year and till date in determining the nature timingand extent of our audit procedures.
xv. According to the records of the Company examined by us andinformation and explanations given to us the Company has not entered into non-cashtransactions with directors or persons connected with him and hence provisions of section192 of the Act are not applicable to the Company.
xvi. (a) The Company is registered as Non-Banking Financial
Institution (NBFI) and is holding a certificate of registration (CoR)from Reserve Bank of India to carry on business of NBFI in terms of Sec 45-LA. of the RBIAct 1934
(b) Ln our opinion there is no core investment company within theGroup (as defined in the Core Investment Companies (Reserve Bank) Directions 2016) andaccordingly reporting under clause 3(xvi)(d) of the Order is not applicable.
xvii. According to the records of the Company examined by us andinformation and explanations given to us the Company has not incurred cash losses neitherin the current financial year nor in the immediately preceding financial year.
xviii. There has been no resignation of statutory auditor during theyear hence clause 3(xviii) of the Order is not applicable.
xix. On the basis of the financial ratios ageing and expected dates ofrealisation offinancial assets and payment of financial liabilities other informationaccompanying the financial statements the auditor's knowledge of the Board ofDirectors and management plans there is no material uncertainty that exists as on thedate of the audit report and that the Company is capable of meeting its liabilitiesexisting at the date of balance sheet as and when they fall due within a period of oneyear from the balance sheet date. We however state that this is not an assurance as tothe future viability of the company. We further state that our reporting is based on thefacts up to the date of the audit report and we neither give any guarantee nor anyassurance that all liabilities falling due within a period of one year from the balancesheet date will get discharged by the company as and when they fall due.
xx. (a) The company has not transferred the amount remaining unspent inrespect of other than ongoing projects to a Fund specified in Schedule VII to theCompanies Act 2013 till the date of our report. However the time period for suchtransfer i.e. six months of the expiry of the financial year as permitted under the secondproviso to sub-section (5) of section 135 of the Act has not elapsed till the date of ourreport.
(b) Ln respect of other than ongoing projects the Company has spentthe amount required and hence reporting under clause xx(b) of the Order is not applicableto the Company.
For MGB & Co LLP
Chartered Accountants Firm
Registration Number 101169W/W-100035
Sanjay Kothari Partner Membership Number 048215
Mumbai 05 May 2022
Annexure - B to the Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") as referredto in paragraph 9(II)(g) under "Report on other Legal and Regulatoryrequirements" of our report of even date to the members of the Company on thestandalone Ind AS financial statements for the year ended 31 March 2022
We have audited the internal financial controls over financialreporting of LKP Finance Limited ("the Company") as of 31 March 2022 inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") issued by the Institute of CharteredAccountants of India (ICAI). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on " Audit of Internal Financial Controlsover Financial Reporting" (the " Guidance Note") issued by the Institute ofChartered Accountants of India and the Standards on Auditing prescribed under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. TheProcedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the standalone Ind AS financial statements whether dueto fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting isa process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of Ind AS financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internalfinancial control over financial reporting includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation ofInd AS financial statements in accordance with generally accepted accounting principlesand that receipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the Ind ASfinancial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based onour audit material weaknesses have been identified in respect of:
i) Independent Confirmation/ term sheet which were not obtained/received from two lenders for the balances outstanding as at 31 March 2022.
ii) Fair valuation of unquoted equity shares as required by the Ind AS109 "Financial Instruments".
A material weakness' is a deficiency or a combination ofdeficiencies in internal financial control with reference to financial statements suchthat there is reasonable possibility that a material misstatement of the company'sannual or interim financial statements will not be prevented or detected on a timelybasis.
In our opinion except for the effects of the material weaknessdescribed above on the achievement of the objectives of the controls criteria the companyhas maintained in all material respects internal financial controls with reference tofinancial statements and such internal financial controls with reference to financialstatements were operating effectively as at 31 March 2022 based on the internal controlwith reference to financial statements criteria established by the Company considering theessential components of internal control stated in the Guidance Note.
We have considered the material weakness identified and reported abovein determining the nature timing and extent of audit tests applied in our audit of thestandalone financial statement of the Company and these material weaknesses do hasaffected our opinion on the standalone financial statements of the Company
For MGB & Co LLP Chartered Accountants Firm
Registration Number 101169W/W-100035
Partner Membership Number 048215
Mumbai 05 May 2022